OPEC, allies continue to gradually pump more oil amid omicron | Business and Energy

FRANKFURT, Germany (AP) – OPEC and allied oil-producing countries on Tuesday decided to pump more oil into the global economy in the hopes that travel and fuel demand will hold up despite the rapid spread of the omicron variant of COVID-19.

The 23-member alliance of OPEC + led by oil cartel member Saudi Arabia and non-member Russia said it would add 400,000 barrels a day in February, sticking to a leaf to slowly restore the production cuts made at the height of the pandemic.

Oil prices rose with the news: U.S. crude traded 1.7% higher on the New York Mercantile Exchange, at $ 77.32 a barrel, while international benchmark Brent was up 1.5%, to $ 80.28. The decision left little ripple in the market as it was widely expected.

After the first reports of the ultra-contagious omicron variant in late November, oil prices plunged and inventories fell. But prices have since recovered and markets have calmed down. Analysts say car traffic and airline activity suggest that omicron, despite making headlines and raising concerns about hospital capacity, may end up not significantly reducing fuel demand.

Oil prices are also strong as some countries have not been able to maintain their share of production, limiting supply.

OPEC’s oil production increases are gradually restoring the steep reductions made in 2020, when demand for motor and aviation fuel fell due to pandemic lockdowns and travel restrictions. Sometimes OPEC + has not acted quickly enough to ramp up production under US President Joe Biden, who has urged producing countries to turn on the taps wider to tackle soaring gas prices and foster economic recovery.

The United States and other oil-consuming countries announced on November 23 a coordinated release of oil from strategic reserves in an effort to contain the surge in energy prices that has helped fuel inflation and increase prices. politically sensitive gasoline prices for American drivers. Still, Biden’s move is seen as having only a moderate effect on prices.

Oil prices soared more than 50% last year as many pandemic restrictions relaxed and the world learned how to cope better with precautions against the virus. The omicron push comes as the global economy is still on the mend: growth has surpassed pre-pandemic levels in the United States, but is only expected to do so in Europe in the first months of this month. year.

A recent drop in gasoline prices in the United States – which are significantly influenced by the price of crude – has stabilized at a national average of $ 3.28 per gallon, down from about $ 3.40 at mid- November. Drivers face different prices depending on where they live – the average price in California was $ 4.66 per gallon, while drivers in Wisconsin paid $ 2.99.

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